30 January 2004

There was a rather interesting decision ("unpublished," naturally enough) on a publishing- and First Amendment-related issue from the California Court of Appeals (the middle level) this week. It concerns itself not with phantom reviews, but phantom reviewers.

A few years ago, a Sony Pictures employee came up with a neat idea for making movies seem great: invent a reviewer and plaster his nonexistent comments in advertisements! Allegedly, only the employee's immediate supervisor knew of this inventive bit of deception (which begs the question about self-deception, but that is not legally significant—at least not yet). This was later exposed. Naturally enough, somebody sued Sony for the deception under California Business and Professions Code § 17200 (California's consumer fraud statute). The interesting twist is Sony's response: an accusation that the lawsuit was merely a SLAPP action (California Code of Civil Procedure § 425.16).

SLAPP stands for "strategic lawsuit against public participation." In its "original" form, a SLAPP suit might be filed by a developer against an individual who criticized the environmental soundness of the development plan in public, particularly if that criticism resulted in an inquiry by a zoning board or other government agency. SLAPP suits often accuse a party of defamation, interference with contractual advantage, or another business tort. The key is that defending against a SLAPP suit is expensive and takes attention away from the underlying criticism, even when it does not succeed in outright silencing the critic. That Sony has resorted to calling this a SLAPP suit, while perhaps within the literal meaning of § 425.16, put the iron boot on the other foot: this is the equivalent of the environmentalist suing the developer to stop deceptive statements, with the developer responding that the environmentalist is unjustly trying to suppress the developer's free speech rights.

Yes, this is a bit like Nike v. Kasky. It turns on the distinction between the extremes of deceptive advertising and political speech. As the California Court of Appeals put it,

For purposes of the anti-SLAPP statute, if Sony’s film advertisements constitute commercial speech, the statute does not apply because the ads did not “further[]… [Sony’s] right of petition or free speech [arising] under the United States or California Constitution in connection with a public issue.” The trial court found that the ads were commercial speech. We agree.

Rezec v. Sony Pictures Entertainment, Inc., No. B160586 (Cal. Ct. App. 2d Dist., Jan. 27, 2004), slip op. at 5 (citations omitted) (PDF, 154kb).

There is a lot of room between the two extremes of pure commercial advertisement (on this analysis, not protected by the First Amendment) and pure political speech (which is). Consider, for example, a vendor who is trying to sell products through student representatives at a high school—perhaps T-shirts emblazoned "Fuck the Draft". This would be a difficult case, with multiple clashing rights. That is not Rezec (or, for that matter, Suziki Motors v. Consumer's Union or Nike v. Kasky), for a very simple reason. "Fuck the Draft" is an opinion that is directly related to political speech, and thus has a strong constitutional relationship to the First Amendment. Attributions of puffery to nonexistent reviewers, however, are not, except perhaps in a satire like This Is Spinal Tap. There is no such suggestion here; Sony's own conduct in firing the "responsible employee" and suspending his immediate supervisor prevents such an argument from passing the laugh test.

The point, then, is this: The right to sell does not include the right to deceive along with it, even when the means of selling involves something that might be characterized as "speech." It might include the right to include utterly ridiculous excerpts from sycophantic reviewers who would say anything for a few more shrimp at Spago—but to attribute those statements to those reviewers, those reviewers must actually have stated it. <SARCASM> It would also be a good idea if they even exist in the first place. </SARCASM> This issue has some interesting parallels in the McCain-Feingold requirement that political ads of certain natures at certain times must clearly state whether they originate with the candidate or a third party. But that is for another time. Under consumer protection law, there is a line between "mere puffery" and outright deception, and there is little question where the Sony ads fall. Thus, claiming that being held responsible for the results of such deception is an infringement on the First Amendment rights of the deceiving commercial party would mean that no lawsuit for fraud could ever succeed, and would remove fraud from the realm of civil or criminal wrongs in this country. The First Amendment does not reach that far.

None of this is to say that Sony will necessarily lose (I think they will); it is only to say that Sony's accusers may have their day in court to try to prove their case and obtain relief. Were I in charge of Sony's defense, I would seriously consider defending by positing that movie reviews are such incredible crap that even the unsophisticated consumer could not reasonably rely upon them; but that would be political suicide in Hollywood. Nonetheless, it has worked as a libel defense in England; more some other time.

I sure seem to have it in for reviewers today.

If anybody needs more proof that Janet Maslin (an overly influential reviewer at the New York Times) needs a reality check, just try reading her breezy, meaningless whirl through a potpourri of recently released "bestsellers" (and by whose definition and on the basis of what hard data, I wonder… or is this just another self-fulfilling prophecy?) in today's Times. As noted at Publisher's Lunch (sorry, it's an e-mail newsletter, but you can subscribe for free), she breezes through ten books in less than 1700 words. Here's an example:

John Grisham's latest novel is one. His books have a way of hitting best-seller lists (with advance orders online) long before anyone even knows what they are. By happy coincidence, "The Last Juror" turns out to be one of his best: a thoughtful and atmospheric thriller that for the first time brings the author back to the fictionalized town of Clanton, Miss. This is the setting for another of his best efforts, "A Time to Kill." The Grisham brand name renders these assets superfluous. Whether they're forceful or meandering, quick or pokey, his books have a track record that proves them Pavlovian stimuli to loyal readers. He writes it; you buy it, even if it's blank or "Bleachers." That's a formula as simple as "Who Moved My Cheese?"

That is the entire review—not one word of substance. And that 150-word average is misleading; almost 30% of the article is devoted to a single, meaningless book.

I find the intellectual dishonesty of this approach quite disturbing. Leaving aside for the moment whether a reviewer has an obligation to say why he or she came to a particular conclusion about a book—I think he or she does, but I'm clearly in the minority—the approach Maslin took is more akin to the celebrity endorsement than even the crappy sixth-grade book report approach that dominates the publishing industry's favorite sources of book reviews and even infects the publishing-category magazines (Locus, Chronicle, Romantic Times, and so on). That's right—a book reviewer acting like a celebrity. That says volumes about both the industry and its inability to realize that its problems are self-inflicted.

That Ms. Maslin's judgment is suspect in any event is beside the point. The real judgment problem here is with the editor who found the article acceptable. Someone coming cold to "reviews" like this would begin to wonder how much the various publishers were contributing in endorsement fees. The reality is, sadly, worse: personal vendettas are far more influential. But that is for another time.

29 January 2004

Speaking of the dangers of patronage…

It appears that the Bush Administration has proposed increased funding for the arts. This is far from an unvarnished good thing; and that is regardless of what political or partisan purpose or persuasion pervades the program, or might influence it in the future. On the one hand, I support increased funding, in a very general sense, for the arts. But I believe that such funding should be hands-off to channels with review later only for financial accountability. The shameful cuts in PBS funding under the Reagan Administration (and later) for the purported "political bias" in its programming are but the tip of the iceberg. The whole point of leaving artists in control of such programs is that polticians are not qualified to judge art, and perhaps nobody is qualified to judge it as it created. As Orwell noted, "[Using] the word 'political' in the widest possible sense…[, t]he opinion that art should have nothing to do with politics is itself a political attitude." Such as these:

Some conservatives, like Representative Tom Tancredo, Republican of Colorado, vowed to oppose the [proposed] increase. Even without support from the government, he said, "art would thrive in America. …. We are looking at record deficit and potential cuts in all kinds of programs," he said. "How can I tell constituents that I'll take money away from them to pay for somebody else's idea of good art? I have no more right to do that than to finance somebody else's ideas about religion."

*  *  *

"Government involvement is designed to take the arts from the grand citadel of the privileged and bring them to the public at large," [Rep. Jim] Leach [R-Iowa] said. "This democratization of the arts ennobles the American experience."

Robert Pear, "Bush Is Said to Seek More Money for the Arts" (29 Jan. 04) (fake paragraphing removed for clarity).

These two extreme opinions are so far at odds with reality that by themselves they demonstrate that neither the Administration nor Congress has any business whatsoever in making these kinds of decisions. On the one hand, Mr. Tancredo's attitude is almost identical to Stalin's; look at what happened to Zamiatin, Pasternak, et al. That's right: he's acting liking a Commie. As soon as government claims control over content in the arts, the arts go to hell. Directly to hell. Do not pass Go, do not collect $200. On the other hand, Mr. Leach's comments disclose an equally dangerous, if not equally obvious, difficulty with government funding of the arts. The unstated roadblock in his glib truism is the grant process. All this does is slightly change the address of the "grand citadel of the privileged," so long as there is anyone other than artists (and even that is with a big caveat) involved in the grant process. The address moves down the road to those artists who are prominent enough, and otherwise well-supported enough, to survive the grant process itself. That is simply not going to include an unknown genius or a radical dissenter (whatever form that radicalism takes).

A more-realistic alternative would be an indirect increase in arts funding by removing some of the market and taxation barriers to the arts. It's all well and good to have marketplace involvement; in fact, it's critical; but perhaps the Oxford University Press's influence on British publishing should be looked at very carefully for some ideas. The OUP has an immense advantage over most publishers: it is untaxed. That may be too radical a solution, particularly since so much of the recognizable "arts" in this country already sits in the hands of corporate conglomerates that seem to be doing quite nicely in the profit column (particularly when using real, and not illusory, accounting). But there are surely ways to manage this that would both increase the real funding available to artists by making it less risky to take a chance and simultaneously avoid the obvious Tancredo problem of pinning particular dollars to particular works. <SARCASM> Besides, the Bush Administration is so fond of bizarre tax cut programs that it should positively enjoy the challenge of creating an appropriately Byzantine system. </SARCASM>

First, the general (and bizarre) news this morning, then (later today) a comment on another item.
       
  • The truly bizarre nature of trademark law, which allows mark-holders (and, in fact, requires them) to constantly assert ownership of common terms, came out yesterday from the dysfunctional Sixth Circuit. The decision in the Eagles (or eagles?) case is much more important for what it implies than for what it says. At its core, this is a case about civil procedure, not trademark law; but the context of the matter is otherwise revealing. From a procedural aspect, it reflects some serious problems with prior counsel; one basis for requesting a delay in the trial date should have been known months before the trial, but was not made clear to the district court: that band members who are critical witnesses would be on tour in Europe during the scheduled trial period. (Yes, those Eagles.) It also reflects the ridiculous standard for "defending" one's mark; the Eagles, from all appearances, had to defend the derivative mark "Eagles Records" from a foundation devoted to preserving the American eagle that, among other things, used the intuitive domain name eaglerecords.org.

    Trademark law should allow a holder to disclaim a particular "unauthorized" or "unlicensed" use of its mark, such as a nonprofit organization using common English terms that just happen to add up to a "fanciful" mark, without jeopardizing all ability to defend the mark against others. It does not; and thus this lawsuit.

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  • Senator Leahy's statement on judicial confirmations is an interesting piece of rhetoric. Although it is at times a bit over the top, and resorts to some unfortunate language, the underlying facts indicate that the judicial confirmation process is broken at this time, and will remain so until somebody blinks. That's not good for anybody; it involves a clear dereliction of duty by everybody involved in the name of partisan advantage; and it should result in a serious spanking behind the woodshed for the Bush judicial-nomination people, for both parties in the Senate—and for the media for misreporting the context of the dispute. There's plenty of blame to go around here; and, frankly, it starts (but by no means ends) with the Administration's removal of the ABA committee on nominations from the process. It's one thing to say post hoc as to a specific candidate that "the Committee's partisanship or 'liberal bias' improperly influenced a particular rating, so I'm going to ignore it"; it's another entirely to cut the Committee out before it says a word as to a particular candidate.

    "Liberal bias"? What do the following confirmed judges have in common (hint: it's not liberalism)? Hon. Alex Kozinski (CA9), Hon. Alice Batchelder (CA6), Hon. Michael McConnell (CA10), and Hon. Patrick Higginbotham (CA5)?

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  • Fascinating that NASA Administrator O'Keefe is now using safety concerns as his main justification for not sending up Hubble telescope maintenance missions when those very same safety concerns were raised repeatedly five years ago and denigrated as impossible. Nothing like a billion-dollar accident to make one realize that safety concerns are valid, eh? One might also wonder whether the ultimate cost is much higher or not, but the problem with assessing costs and benefits of scientific research is that the benefits are seldom truly apparent until a couple of decades down the road from the costs.
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  • Of more than passing interest, the World Economic Forum has begun demonstrating some of the potential dangers of patronage in the arts. Although it is giving a public presence to prominent authors who do not necessarily accept the views of the Forum, one must question whether the real audience—the attendees—is listening to or rubbing elbows with the celebrities, or just being a potential pool of patrons.

    "There's no such thing as being a writer, and that's the be-all and end-all," [Nobel Prize in Literature honoree Nadine] Gordimer said. "I'm also a citizen, a human being, and I have social responsibilities. I'm here to learn how the world is being run and see what I regard as the biggest problem, the gap between rich and poor. …. There's a feeling that the past is the past, and we start from zero. But the past largely forms the present, and from there one looks at the future. And the writer's imagination encompasses this role."

    Alan Cowell, "Writers, Spying in the House of Power" (29 Jan 04) (fake paragraphing removed for clarity).
  •    
  • I have only disgust for some obviously improper behavior (plenty of disgust to go around for plenty of improper behavior) in the Detroit terrorist-cell trial. Did nobody even ask an experience analyst who did not have a preset political agenda just what might be going on? I suppose not; because if they had, and the analyst gave a complete answer, and the answer was given much weight, that trial would not have happened—or at least would not have proceeded in that fashion.

28 January 2004

A few notes around the Internet this morning…
  • Amazon has declared its first annual profit. That is, if you accept traditional accounting definitions of profit—and there is more than one GAAP in that logic. Reading between the lines, if Amazon was a "traditional" brick-and-mortar retailer, analysts would be decrying its (virtual equivalent of) poor same-store sales performance.
  • Similarly, Time-Warner has reported an operating profit, as opposed to its $45 billion loss a year ago. Some of that loss, however, was at least as illusory as any that I've seen reported, being founded on the indefensible and bizarre notion of "goodwill" as an accountable asset. There is little doubt that the merger of AOL and Time-Warner was a bad idea; it's just that the particular numbers being bandied about have about as much relationship to reality as Vietnam-era body counts.
  • Over at The Atlantic, one can see that spin control over Iraq is up to at least 45 rpm and getting faster. We've now got the administration blaming "incompetence" in the intelligence community for the decision to go into Iraq on inadequate evidence. Hogwash. The intelligence community is far from blameless; but George III and his people should take a close look at what George II did to the community in 1989 and 1990 before asserting that any "incompetence" was the community's own "fault." Clinton and Reagan didn't help, either; but let's keep this in the family. It's rather ironic that George II had served as Director of the CIA and yet hired so many policymakers who had nothing but disdain for HumInt and the providers thereof. On the other hand, the policy people didn't cause all of the problems; there's plenty of blame to go around, and we can't forget the bureaucrats.

27 January 2004

Sins of the (Great-Great-Grand)Father

The Perfesser noted today that

So who do we punish when we force the corporation to pay reparations [for long-past wrongs such as slavery]? Since the payment comes out of the corporation's treasury, it reduces the value of the residual claim on the corporation's assets and earnings. In other words, the shareholders pay. Not the directors and officers who actually committed the alleged wrongdoing (who in most of these cases are long dead anyway), but modern shareholders who did nothing wrong.

"The Immorality of Corporate Reparations" (27 Jan. 04). Two additional pieces of irony reinforce his conclusion, whether it's corporations or governments that are the payors.

  • My ancestors weren't even in this country until this century. Further, going back about 350 years in the gene pool, none of them had anything to do with slavery or the slave trade over in the Old World, either. Thus, if the value of my shares in, say, JP Morgan Chase (neither implying nor stating that I do or do not own such shares) is harmed by forcing the corporation to pay "reparations," I have been harmed twice: Once by the mere fact that I am a current shareholder whose "profit" from 150-year-old conduct is so attenuated by time that it cannot reasonably be attributed to me (as the Perfesser noted), and again because it was legally impossible for me or my ancestors to have any responsibility for slavery. (None of this nonsense about how the Old World bears responsibility for allowing slavery to continue, because that assumes that individual citizens in the Old World had any influence on policy — in other words, it assumes that the forms of government common now were in use at all then.)
  • Let's pretend for the moment that everything occurred last year, so that time is not an issue. Don't kid yourself about the potential consequences of reparations: successful blackmail would depress the market of all potentially targetted firms. If JP Morgan Chase pays, Citicorp stock will drop to discount possible extortion. So, if I very carefully made sure that my investments were in firms that did not have an obvious connection, the overall drop in market value (particularly if, say, I had invested in exchange-based futures or options) would "tax" me for the blackmail.

That my own "ethnicity" has a longer and greater historical claim on the "assets" of corporate and government wrongdoers reminds me of It's a Mad, Mad, Mad, Mad World, with every potential victim group racing to get a piece of an elusive (and quite probably illusory) fortune. That the fortune will eventually come out of the various contestants' own pockets seems to have escaped the rabble.

The "reparations for slavery" suits are really more about the failure of the Great Society programs — for Avogadro's Number of intextricably intertwined reasons — and the continued poverty-by-ethnicity in this country than anything else. They are not about economic justice, or anything else; even the accusation of "massive attorney's fees" as motivation is at best a tertiary consideration. The racism inherent in the claims themselves seems also to have escaped the proponents; but then, I took Dr. King at his word, and believe that the content of one's character (and not the color of one's skin, or for that matter the identity of one's ancestors' place of worship) is what matters.

26 January 2004

Don't kid yourself, Professor Froomkin. Being a flag officer (general or admiral) is intensely political and partisan. Without either endorsing or denigrating his candidacy, General Clark has more foreign-policy political experience than the rest of the Democratic candidates combined. He did, after all, serve as the NATO boss for several years.

And, if you believe that pure leadership is how one rises to become a flag officer, you're definitely kidding yourself. In the modern era (that is, since the adoption of DOPMA in the early 1970s), one can no longer be a complete incompetent and make it to general or admiral. However, some of the politics that go into the designation of who is even eligible for that grade are so hidden to civilians that their bias is not readily apparent. For example, of all the generals in the Air Force less than twenty are not rated officers (pilots and navigators)—and most of them are doctors. This bias is built into the system, because Congress in its infinite wisdom has determined that nonrated officers may not command units that have any flying mission—or sit in the chain of command above them. However, most pilots do not begin to have any real supervisory authority over enlisted personnel until they become majors (10–12 years down the road), which to say the least causes those of us who did some real problems. Enlisted personnel are, even in the top-heavy Air Force, 80% of the troops.

It's no longer quite the case of getting promoted to general on family-tie grounds. However, the need for well-placed mentors is even greater than in "traditional" politics, for a very simple reason: "grass-roots campaigning" is insubordination, not building a power base.

Noted with almost no commentary other than general approval:

Unfortunately, this article continues a meme that I have often found among progressive people-- that the Internet is bad for democracy. I think that this view is deeply mistaken. The Internet has its strengths and weaknesses, just like the traditional mass media have. The question is not whether the Internet is good or is bad for democracy. The key question is how the Internet changes the ways that democratic activities of organization, discussion, protest, and decisionmaking occur, and how the code of the Internet can be altered in different ways and different contexts to promote these different forms of democratic activity.

Jack Balkin, "Political Organization and Political Discussion on the Internet" (25 Jan. 04)

24 January 2004

As Usual, Missing the Point
In an even-handed article to be published in tomorrow's New York Times Magazine, Robert Boynton tries to explain the controversy between the "strong copyright" and the "copyleft" movements. However, he—and the proponents of the two positions—have missed the boat, because they have not looked at the behavior of the actual actors. Boynton describes the controversy this way:

Once a dry and seemingly mechanical area of the American legal system, intellectual property law can now be found at the center of major disputes in the arts, sciences and—as in the Diebold case—politics. Recent cases have involved everything from attempts to force the Girl Scouts to pay royalties for singing songs around campfires to the infringement suit brought by the estate of Margaret Mitchell against the publishers of Alice Randall's book The Wind Done Gone (which tells the story of Mitchell's Gone With the Wind from a slave's perspective) to corporations like Celera Genomics filing for patents for human genes. The most publicized development came in September, when the Recording Industry Association of America began suing music downloaders for copyright infringement, reaching out-of-court settlements for thousands of dollars with defendants as young as 12. And in November, a group of independent film producers went to court to fight a ban, imposed this year by the Motion Picture Association of America, on sending DVD's to those who vote for annual film awards.

"The Tyranny of Copyright? (25 Jan. 04). As usual, this misses the point almost entirely; but the point is buried in the specific examples.

Note that every single example of questionable or surprising copyright enforcement efforts cited by Boynton in this passage (and, indeed, in the rest of the article) involves either a transferee or work-for-hire proprietor. That strongly hints that the problem is not with providing authors with the exclusive rights to their respective rights for a limited time, the constitutional imperative. Instead, it hints that the problem is with nonauthors who acquire all (or almost all, see 17 U.S.C. §§ 203, 304(c)) of the author's rights. This is a distinct behavioral difference that indicates that perhaps we need to treat the two classes of copyright holders differently, not identically.

As a modest proposal (but more serious than was Swift's), I suggest the following reforms:

       
  • Reform work for hire so that it treats the commissioning party as a transferee, not the original author (§ 201(b)).
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  • Shorten the revocation period under §§ 203 and 304(c) to twenty years, and reverse the burden of operation—that is, make revocation automatic unless the holder agrees otherwise, instead of requiring the holder to take action. (Note that an author who is satisfied with the way his/her book, or music, or sculpture, or whatever is being handled need merely extend the transfer for another twenty years.)
  •    
  • Explicitly define the controlling holder of a collaborative, multimedia piece (such as a film) instead of relying upon rapacious industry practices to define everything as a work for hire.
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  • Require the joinder of the actual (natural person) author or his/heir heirs in every lawsuit in which a transferee seeks to sue under the Copyright Act to enforce the rights it has received.

I do not pretend that these and similar changes will completely eliminate problems; they would not, for example, have prevented Margaret Mitchell's greedy heirs from attempting censorship. However, they would isolate those problems so that they could be seen for what they are, and managed without harming the rights of the vast majority of the actual authors (and, in modern use, artists, filmmakers, and musicians) whose creativity is supposed to be encouraged by copyright. However, the "bad actors" are almost entirely middlemen; the way to cut down on "bad actions" is to control the middlemen, not the original suppliers.

Substituting Judges

There has been some surprise and dismay expressed that California state courts allow peremptory challenges against judges.

It stands to reason, I suppose, that the fairness-and-appearance-of-fairness principle that supports the institution of peremptory challenges against jurors would also apply to the other arbiter in the courtroom, the judge. On the other hand, though, it does not seem unreasonable to approach judges with a stronger presumption of impartiality than we do jurors. And I think we worry about the partiality of jurors mostly because they are finding facts rather than making legal judgments. Fact-finding, it seems to me, allows somewhat more play for subtle life-experience biases than does making rulings of law. For those reasons, I guess, it seems to me that there'd be a pretty strong argument that peremptories against judges are unnecessary, and perhaps unwise (in the sense that they might contribute to a general public perception of judges as unreliable).

Eric Muller, "Peremptory Challenges Against Judges!" (23 Jan. 04).

I cannot agree. First of all, it's not that unusual.

A substitution of judge in any civil action may be had in the following situations:…
(2) Substitution as of right. When a party timely exercises his or her right to a substitution without cause as provided in this paragraph (2).
   (i) Each party shall be entitled to one substitution of judge without cause as a matter of right.
   (ii) An application for substitution of judge as of right shall be made by motion and shall be granted if it is presented before trial or hearing begins and before the judge to whom it is presented has ruled on any substantial issue in the case, or if it is presented by consent of the parties.
   (iii) If any party has not entered an appearance in the case and has not been found in default, rulings in the case by the judge on any substantial issue before the party's appearance shall not be grounds for denying an otherwise timely application for substitution of judge as of right by the party.

735 Ill. Comp. Stat. 5/2-1001(a) (emphasis added).

Perhaps I am too cynical; I prefer to think of it as being "realist." This state elects all of its judges. They are intensely political creatures, and all too often partisan creatures. (Fortunately, I do not ordinarily appear in the courts in this state.) I believe that limited peremptory challenges to judges, at least in civil matters, are a necessary price and consequence of electing judges. Many of the judges make every real effort to be unbiased, impartial jurists. Too many do not; and, due to quirks in our civil rules, we have a much higher proportion of bench trials here in Illinois than in most states for those matters that get to trial.

My simple solution to this seeming iniquity is to eliminate election of the judiciary. But that is for another time, and for a much longer article.

23 January 2004

Unnatural Persons
The Perfesser has a fascinating, pretty nontechnical discussion of the business judgment rule in corporation law up on his website (it should be an education for authors who constantly wonder why the publishing business seems so conservative). I would like to point out one unstated assumption, though. It is not necessarily a bad assumption; but because it is unstated, it should be at least acknowledged.

There is a commonplace assumption that the Supreme Court held, in the late 19th century, that "corporations are persons" for purposes of the right to sue and be sued. Well, it didn't; the statement in question was added by the Reporter of Decisions in the syllabus, and appears nowhere in the decision itself. Santa Clara Cty v. Southern Pac. R. Co., 118 U.S. 394 (1886) (unfortunately, the publicly available free versions do not include the syllabus). The reporter states that during oral argument the question was foreclosed by the justices; but that is not consistent with then-current practice. It is possible; it is internally consistent with the reasoning in the opinion; it might even make sense; but it is not the law.

The assumption to which I am referring is the dichotomy between the Corporation and corporate operations. In the strictest sense, Corporations are not persons, because they cannot make decisions for themselves. At most, they are infants, whose every decision must be made by a parent. Professor Bainbridge's essay is an attempt to define just who those parents are. It is underinclusive, as all purely economic analysis of corporations must be. For example, it does not concern itself with corporate operations that are outside the bounds set by law, such as OSHA or environmental regulations. Neither does it concern itself with the symbiosis of the corporation with its communities; just as "no man is an island," no corporation is isolated from its community. Not even Willy Wonka's chocolate factory is truly isolated, even though all but one of his employees was an Oompa-Loompa; people were driving the trucks, collecting the taxes, building franchise shops, etc. Conversely, there is no reason for Mobil Oil to sponsor Masterpiece Theater on PBS except insofar as it wants to take advantage of that symbiosis. I do not believe that this symbiotic relationship, except in extreme circumstances, should be a controlling factor. However, the purely economic models ignore it completely; and for that reason, arguing over whether the directors or the shareholders are the "brain" of the corporation is an incomplete inquiry doomed to come up with an incomplete answer.

"Blanket" Means "Blanket"…
not "a good knock-down argument" (no apologies to Dr. Dodgson). The Illinois Supreme Court ruled today that Governor Ryan's blanket clemency of those on death row at the time he left office was within his power to do so, whatever technical "defects" may have been raised concerning clemency petitions. The most interesting observations are these:

Thus, in the typical case, an inmate who does not follow proper procedures will not get his petition before the Governor. The failure of the inmates listed in count I to consent to their petitions would have given then-Governor Ryan a basis to refuse to consider the petitions on their merits. This, however, was not the typical case. We take judicial notice of then-Governor Ryan's public statements in issuing these commutations (See Governor George Ryan, Address at Northwestern University Law School (January 11, 2003)), and it is apparent that he intended to grant blanket clemency because he believed that Illinois' death penalty system was broken. Thus, in this instance, the failure of certain inmates to consent to their petitions was irrelevant to the Governor. That does not mean, however, that section 3-3-13 does not play an important role in the clemency process.

*  *  *

Petitioners focus on the phrase "after conviction" in article V, section 12, of the Illinois Constitution. The constitution gives the Governor the power to grant "reprieves, commutations and pardons, after conviction, for all offenses on such terms as he thinks proper." According to petitioners, the term "conviction" sometimes refers to an adjudication of guilt and sometimes refers to both an adjudication of guilt and the imposition of a sentence, depending on the context in which it is used. People v. Woods, 193 Ill. 2d 483, 487 (2000). Petitioners contend that the use in article V, section 12, of the term "conviction" means a finding of guilt plus a sentence. In their reply brief, however, petitioners concede that with respect to the Governor's pardoning power, article V, section 12, allows the Governor to act following an adjudication of guilt. Petitioners argue that the single term "conviction" in this section means two different things:

"Accordingly, in the context of the Governor's pardon power, the term 'after conviction' means after a guilty verdict, regardless of whether there is a sentence. By contrast, in the commutation power, the term 'conviction' must include an existing sentence."

We cannot agree with petitioners that "conviction" means two different things in article V, section 12. Rather, we believe that the framers intended the word to have its commonly understood meaning, which is an adjudication of guilt.

People ex rel. Madigan v. Snyder (23 Jan. 2004).

This is a striking example of desperate attempts by the anti-clemency forces to apply a "form over substance" standard to clemency petitions. I have nothing whatsoever against the victims; I realize that this decision may come as a blow to some of them. Remember, however, that retribution, deterrence, incapacitation, and rehabilitation are only the elements by which an actual punishment imposed may be evaluated for its social effect. While consideration of justice cannot be blind to those four elements, neither can it be ruled by them. Governor Ryan made a compelling case that he could not be absolutely certain that the Illinois system had properly sentenced the right people—both inclusively and exclusively—to death. Given the discretion he has within the Illinois Constitution, the ultimate result of this case should have been obvious. This leads one to question the actual motives of the government officials involved in opposing the clemency order—most particularly whether their own ambitions overcame their good sense. <SARCASM> Presuming that, as elected officials in a state with a proud heritage of voting fraud, they have any good sense. Or thoughts of their own, for that matter. </SARCASM> (Article 88 does not apply; not only am I no longer under its jurisdiction, but I am not expressing contempt. I am expressing that they are beneath contempt.)

The irony that Lisa Madigan, who replaced Jim Ryan (one of the officials implicated, but not punished, in the Rolando Cruz wrongful-conviction saga) as state Attorney General, continued this battle is a bit much. Would it surprise anyone to learn that she's a relative of the Democratic leader of the state House of Representatives? I didn't think so.

Law is merely politics continued by other means. These are some of the other means.

22 January 2004

It was library day today. My library. I outgrew another set of bookshelves, brought the new ones in from the basement since the varnish had dried, and realized that some reorganization was necessary.

Just the law materials. The other 4,000-odd books will have to wait.

21 January 2004

Activist Judges and Redefinitions
During the State of the Union address last night, George III blamed "activist judges" for all of the problems concerning same-sex marriages. This conveniently ignores the elected bodies, such as many city councils, that have actually led the courts toward something. For the moment, I'll ignore the unacceptable sectarian component to his position. The Perfesser praises (or at least remarks upon) Bush's attempt to shift the argument from its substance to its procedure:

The move Bush makes here is to begin shifting the terms of the debate from outcome to process. Yes, he's still focusing too much on whether the law should recognize gay marriage, but at least he has begun to shift attention to the real question, which is "who decides"? The people's elected representatives or the imperial judiciary?

*  *  *

Whatever happens with the legal institution of marriage, however, ought to happen as a result of democratic processes rather than by judicial fiat. The founders of our republic set up a carefully nuanced set of checks and balances, but the last couple of generations of Americans have allowed nine unelected old men and women to seize control of a vast array of deeply contentionous social and cultural issues of national import knowing that they are immune from being held accountable for their decisions. Our judges now use the law to impose elite opinion about how society should be ordered regardless of the democratic will. We have become courtroom spectators rather than participants in the democratic process. It is as the famed First Things symposium put it, The End of Democracy.

DOMA, the FMA, and the SOTU (21 Jan 04) (emphasis added).

The snide rejoinder is Loving v. Virginia, 388 U.S. 1 (1967), which required the Supreme Court to tell the "elected representatives" in Virginia that Brown means that miscegenation (interracial marriage) statutes are unconstitutional. Of course, that is an instance of active disdain for the rule of law by the legislature in question, as they had been told repeatedly by their legal advisors that the statute was unconstitutional.

More seriously, I lived in England for several years while on active duty, particularly during the Spycatcher controversy. (IMNSHO, nothing in Spycatcher would have endangered actual intelligence-gathering or counterintelligence; but the details fall under my NDA.) An "imperial" judiciary is the best counterweight to an "imperial" legislature. (Keep in mind that we do not have a democracy in this country; we have a democratic republic.) That is precisely what there is in the UK, with its constitution that consists of all the laws of England, toothless Law Lords (although that might be changing), and tradition of autocracy. That is the danger of allowing rights of minorities—however constituted—to be the exclusive province of the elected branch(es) of government.

Courts have an important role to play in this whole debate. The extent to which courts are making policy decisions that are improper is inextricably intertwined with the question of recognition of rights—both what and whose—and one that cannot be evaded by appealing to the wisdom purportedly inherent in elected representatives. The courts did not give us Jim Crow, "three-fifths of all others," the Alien and Sedition Acts, HUAC, or Richard Nixon. They are by no means perfect; it did, after all, take legislative action to force consistent recognition of disabilities and age discrimination. My point is that even when the courts (or conversely the elected branches) are "overstepping their bounds," it is ordinarily in response to paralysis in the area. Nature abhors a vacuum; so does power; so does society.

So, in that way, I simply cannot agree with the Perfesser (or the President) that the courts have been excessively activist in the same-sex marriage arena; after all, all of the "objectionable" law in terms of actual rights has been imposed by elected officials, not courts. Lawrence only indicated that the right case might result in the Supreme Court possibly declaring a right to same-sex marriage. This is, in other words, a straw-man argument: the problem is that elected officials in some jurisdictions are disagreeing with the "sanctity of marriage" position and implementing it in their own ways. Blaming the courts for that—with the specter of Padilla and Hamdi carefully relegated to silence, which is ironically appropriate—is at best a non sequitur, but is more likely the misdirection of a stage magician.

Since I'm between appointments, I'll just note a couple of things in passing.
       
  • The Connecticut Bar has made plain that it is a combination in restraint of trade using the formalism of state regulation of attorneys as justification for something that is purely a business practice. The CBA refused to allow MJP on grounds that

    "Connecticut is a high-cost state. Competition from lawyers in low-overhead states makes the practice of law a race for the bottom we cannot win," wrote Cava, of Zeldes, Needle & Cooper in Bridgeport. "Having built reputable practices, can our members afford the inevitable reduction in compensation they will have to absorb to remain competitive with the bottom fishers from 49 other states?"

    Can you say "price fixing"? See? I knew you could! At least this is more honest than a purported concern for inability to regulate lawyers from out of state…

  •    
  • Speaking of regulating lawyers, how much do you want to bet that at most one or two scapegoats will take the fall for this conflict of interest? Even my dog spotted this one. But then, she's smarter than the average 1L—when given a choice among several books to chew on, she always chooses the most "literary" of them.
  •    
  • Speaking of unjustified monopolies in the law, LLRX discusses the Stanley (founder of FindLaw)/West fiasco (scroll down past the bigass graphic). I couldn't put this in a work of fiction, because fiction has to be at least plausible and believable.
  •    
  • The IPKAT notes that, due to droit morále, women can't wait for Godot. OK, so author's moral rights have a downside, too.

20 January 2004

A Rant on Fake (Newspaper-Style) Paragraphing
Those of you who follow this blawg at all have noted that quotations from newspapers often include this qualifier after the citation:

(fake paragraphing removed for clarity)

Sorry, guys, but I was taught that most paragraphs—and particularly paragraphs that describe in detail the heart of a story—should consist of more than one sentence. The example from this morning is an excellent one. That one paragraph in my quotation is three paragraphs in the article, consisting of one, two, and two sentences. Critically, the last two paragraphs actually do not have a topic sentence; the first (one-sentence) paragraph is the only real topic sentence. That those last four sentences only develop and clarify the first sentence should have been a hint.

I suppose I could blame Rudolph Flesch and the "readability index" for this; but that's no excuse for the National Law Journal, which bloody well should not be written down to a so-called "sixth-grade reading level" in the first place. If this indicates some disdain for the newspaper business and its "standards," so be it. A reader who is actually paying attention to the article surely can follow a five-sentence paragraph… particularly since that is the "standard" taught in composition courses these days. Fortunately, I'm not paying to have my intelligence insulted like this. Well, I suppose I am, in the form of Internet access fees, but that's more like a library fee than a fee for a particular publication.

So you'll continue to see that qualifier. A lot.

I'm a procedure guy myself. So when I saw the Perfesser's comments on the Louis Vuitton suit against Morgan Stanley in France, I was less interested in the substance—which is disturbing enough—than in the basis for jurisdiction. Now, I do not know whether the Morgan Stanley report in question was published in France; if so, the following analysis is irrelevant.

But, if the report was not published in France, we have the same problem as with the Australian assertion of jurisdiction over the Wall Street Journal that I discussed six months ago or so: that the location of the alleged disparager is both outside that nation and reasonably so. I am not real happy with the whole concept. It's not as if LVMH is incapable of suing in a US court, or incapable of suing in a US court asserting that choice of law must defer to France (a losing argument, but good-faith enough to get it in front of the court without violating Fed. R. Civ. P. 11). Morgan Stanley operates principally from New York. Assuming that the allegedly negative recommendation issued from New York… didn't I just discuss something like this earlier today (see the preceding post)?

In any event, this points to a jurisdictional defect in common practice: the presumption that jurisdiction over a tortious act lies wherever the effects of that tortious act may be felt. (Whether "business disparagement" is properly characterized as a "tortious act" is a far more difficult question for another time, and perhaps for a law review article.) The point is that there is more than one factor in determining propriety of jurisdiction, and treating this one factor as dispositive is not consistent with the way jurisdiction is treated for any other area of the law. In contracts, for example, one considers the citizenship (and, for businesses, the corporate headquarters location) of the parties; the place of making of the contract; the place of performance of the contract; whether either side's performance was complete, partial, or pending; whether the contract concerned a transfer of an interest in real property; the location of witnesses and documents; and the place of the asserted breach in determining where a suit may be brought. The answer is usually that there is more than one jurisdiction in which it may be brought, but that there is a reasonably strong preference for bringing it where the defendant may ordinarily be found.

If nothing else, this is further proof that the law is a web. It's not entirely seamless (in fact, it's pretty seamy, and I did indeed set this whole sentence up just to make that pun), but things are much more interconnected than one ordinarily learns in law school.

An interesting story in the National Law Journal on the Consumers' Union-Suzuki matter. The most interesting remark is:

Suzuki got a break when a 9th Circuit majority found a difference between a loss at trial and a loss afterward. Bose [v. Consumers Union of the U.S. Inc., 466 U.S. 485 (1984)] applies only to post-trial verdicts, the court said, so it was not required to afford C.U. any more latitude than any other defendant in any other type of case. Suzuki had claimed the magazine reported with actual malice. The 9th Circuit said that is a triable issue of fact and remanded the case for trial. In a later dissent, Judge Alex Kozinski railed against the court's failure to follow Bose. "If C.U. can be forced to go to trial after this thorough and candid disclosure of its methods," he wrote, "it will be impossible to issue a meaningful consumer review that a band of determined lawyers can't pick apart in front of a jury."

Andrew Harris, "A Run at the Streak" (19 Jan 04) (fake paragraphing removed for clarity).

Should CU lose, and the loss be upheld on appeal—I consider this highly unlikely, but anything can happen in a jury trial—this raises some interesting issues for book reviewers. Consider Author X, who is upset at a bad review Book A by Reviewer Y. In the course of the review, Y compared A to a number of high-literary classics, stated that there was no comparison, and proceeded to excoriate X for an "infantile vision of the art of storytelling" (no, I will not reveal anything further on the source of that quotation, and it's not on the Internet so don't bother searching). He continues to trash A through the remainder of the review as not worthy of any reader's time and money. A sells poorly, because Y is an influential reviewer, particularly with libraries (a prime market for A). X and Y have never been friendly. Therefore, after A is remaindered nine months after issue with 80% of the advance unearned, X, being a twenty-first century American, does what most twenty-first century Americans are reduced to doing: he sues. X models his theory on the facts in Suzuki, claiming that comparing his commercial fiction to high-literary classics is equivalent to the extreme maneuvers and rigged testing that Suzuki alleged CU had done to trash the Suzuki Samurai.

The right answer under the Ninth Circuit's opinion in Suzuki is that, presuming that X can come up with "more than a shred" of evidence—perhaps including "expert" opinions by S&M dorks on the "proper" comparisons for A—X v. Y must proceed to trial on the issue of actual malice and product disparagement. That's certainly not going to slow me down, because my acidic reviews (e.g., these relatively mild examples) (N.B. asbestos-lined monitor recommended) are mine. But when they're WFH from a deep-pocket but not particularly sophisticated publisher, such as PW or Booklist, one must question whether there would be pressure to tone down (or perhaps even not print) negative reviews.

The irony is that under my theory of reviewing books, comparison to high-literary classics is the only acceptable standard. To paraphrase Ursula K. Le Guin, one does not compare a violinist's skills to those of the high-school kid next door, but to Itzak Perlman—even if doing bluegrass fiddling (at which Perlman, in a notorious PBS performance in the late 1970s, proved that his classical training made him a better bluegrass fiddler than the well-known performers who impromptu invited him onstage to "jam" with them). One does not find areas for improvement or areas of true expertise by comparison to less than the best, whether of the artist or of the work of art.

18 January 2004

A Point of Disagreement
I'm afraid that I must disagree with the Perfesser. He remarks that:

A basic tenet of libertarian welfare economics is that government should provide only those services that will be underproduced due to market failures. The government provides national defense, for example, because security is a public good and therefore will be underproduced by the private sector. I don't think you can make the case anymore that space travel is a public good:

Public goods ... are non-excludable and [non-rivalous] in consumption. An example is a street sign. It will not wear out, even if large numbers of people are looking at it; and it would be extremely difficult, costly and highly inefficient to limit its use to only one or a few persons and try to prevent others from looking at it, too. A traffic light or clean air is a further example.

Space travel obviously satisfies neither condition: You can restrict access to your spaceship and not everyone can use it simultaneously.

"Leave Space to the Private Sector" (17 Jan 04) (citation omitted). This, I am afraid, misunderstands the nature of space travel: it considers the spaceship to be the entire program.

One simple example of this is a look at something similar: aircraft development. It wasn't just the aircraft themselves. Sure, we can fly higher and farther. But the computer on your desk (or lap) has benefitted from materials initially developed for aircraft. Roads and other construction have benefitted from developing the technology to lay down a two-mile-long, perfectly flat runway. Portability of radios, high-compression internal combustion engines, digital control systems in factories, and more other things than I can shake a stick at have been at least catalyzed by aircraft development. Yet, on a strictly accounting basis, those things would not be ascribed to aircraft development. And, of course, none of this was predictable just from the idea that "we need better aircraft."

There is an interesting book review of two books on the AOL/Time Warner merger debacle in today's New York Times Book Review. I've been no friend of AOL since the early 1990s, shortly after it got off the ground and decided that noncompliance with existing standards was actually a sign of being user-friendly. I'm not much more of a friend of TimeWarner, and will probably become even less of one in the next year or two if TW tries to act against several of my clients. (Occasionally, representing an author requires maintaining a defensive posture, not necessarily suing.) In either event, it is interesting to see some of the material that one could obtain only in scattered sources beginning to appear in consolidated form in reputable books. This fits nicely into the Perfesser's remarks on corporate governance—and shows that the rot is a lot deeper and wider than Enron and other companies whose principal business turned out to be gambling with financial instruments.

17 January 2004

More on Pickering
During my rant on the Pickering recess appointment yesterday, I mentioned Northern Pipeline as a potential barrier to the validity of anything Pickering hears on the Fifth Circuit. Northern Pipeline is a bankruptcy case from the 1980s. It overturned the power of bankruptcy judges—who are appointed for fixed terms under Article I, not as life-tenured judges under Article III—to hear everything and anything related to a debtor. Current doctrine allows bankruptcy judges to hear only "core matters"—that is, matters directly related to the validity of a particular assertion of debt in the matter.

Last spring, the Supreme Court decided in Nguyen v. US that a Ninth Circuit panel consisting of two confirmed Ninth Circuit judges plus a District Court judge from the Northern Marianas Islands, a US Pacific territory, could not hear an appeal. Territorial judges, although given the general status of federal District Court judges (who are appointed under Article III), are Article IV judges—they are appointed without confirmation for ten-year terms. Interestingly, all nine justices agreed that the panel was improper; the split was over the remedy available because Nguyen had not objected to the panel at the time it heard the case.

Northern Pipeline is actually a much clearer opinion than is Nguyen (and thus why I thought of it first!). Nguyen is primarily a case about remedies—that is, whether the defendant was entitled to have his appeal reheard by a proper panel or not. Those same remedies will be available should the Pickering recess appointment be improper—and you can bet that attorneys will raise the matter this time to avoid a split!

The ultimate question, though, is why a recess appointment is not proper. Logically, it cannot be distinguished from the limited-term appointments of bankruptcy judges under Article I and territorial judges under Article IV. It is a limited-term appointment (a maximum of about two years, at the changing of a Congress after federal elections in even-numbered years) that does not require—and, in fact, specifically evades—confirmation by the Senate. Although the term of a recess appointment is not explicitly limited, one thing that one definitely can say is that it is not the life tenure explicitly given Article III judges. Congress cannot, using its undoubted Article I power over bankruptcies, give bankruptcy judges full Article III powers without subjecting them to the confirmation process (Northern Pipeline), and Article IV judges cannot sit on Article III appeals court panels even at the specific invitation of the appeals court (Nguyen). That more than one characteristic is in common between those two cases and Pickering's appointment—the limited tenure and the absence of confirmation—and that Nguyen expressed disapproval of improper panel composition by all nine justices should give one pause. And more than pause. Now, consider that it was the Fifth Circuit… but that's for another time.

16 January 2004

Kindergarten Recess
Ohdearohdearohdear. The Hon. Charles Pickering, Sr. has just gotten a "recess appointment" to the US Court of Appeals for the Fifth Circuit, courtesy of his good buddy at 1600 Pennsylvania Avenue there in DC. This is a very, very bad idea, for several reasons.
       
  • As Howard Bashman notes, use of the "recess appointment power" for the judicial branch is probably unconstitutional. Using an appointment power within one's own branch of government is serious enough; using it to another branch is right out.
  •    
  • As Professor Solum notes, even if a "recess appointment" to the judiciary is somehow within the bounds of the President's Constitutional authority, "It might be argued that the current adjournment of the Senate is not a recess--because it is not between two different sessions of the Congress." This a correct statement of fact. One need only look at the last statement in the record from the Senate prior to its "winter holiday." The "slippery slope" corollary is obvious, too: What if the Senate just honored a three-day weekend? Or just went home early for lunch one afternoon?
  •    
  • Tactically, you don't really think the Democrats will ever allow a vote on Pickering now, do you? He's got less than a year remaining on that appointment (it will expire on 03 January 2005, when the new Senate goes into session after the elections), and will certainly not be reappointed by a Democratic President if the Democrats win in November. Further, by accepting the appointment, Pickering gave up his tenured seat as a district-court judge.

If nothing else, what this appointment demonstrates is that Bush really has no intention of relying upon any criteria other than political loyalty in selecting candidates for the federal bench. I won't pretend that one can "depoliticize" appointments, or even "depoliticize" judges. Law is merely politics continued by other means. The proper term here is "partisanship," not "politicization." <SARCASM> Maybe it's just an honest admission of what the judicial appointment process is all about. </SARCASM> But I hope not.

What concerns me the most is the disdain that a recess appointment of a candidate under a filibuster demonstrates for the rule of law. A recess appointment of a judge is bad enough; when the judge in question could not be confirmed under the preexisting rules (whether internal to the Senate or not, they are still the law), one can reach only one conclusion: Sore loser. As it happens, I'm not a big fan of filibusters; on the other hand, neither do I believe that "advice and consent" means rubberstamping or one-way communication. "Advice" clearly implies communication from the Senate to the President. Under the hoary old theory that every word in a statute or constitution should be interpreted to have meaning, that is a necessary assumption—because otherwise, the clause could have said "consent" alone.

If the filibuster rule is so onerous that it must be changed, then change it. Don't evade it through a dubious appointment. Stop and think for a moment of the potential chaos if a litigant whose case is drawn to be heard before Judge Pickering objects on the record, files a petition for certiorari on having a non-Article III judge decide the case (see, e.g., Northern Pipeline)—and wins. A year's worth of decisions will go out the window in an eyeblink. As averse to this result as I think the Supreme Court would be, distinguishing Northern Pipeline is going to be awfully difficult. And I don't even want to think about what happens in panel decisions that go 2-1 with Pickering in the majority…

Am I just paranoid, or do I see the Macchiavellian hand of Karl Rove in this?

Perhaps I should ask this "clean-living fellow" a hypothetical, entirely theoretical question on Thanksgiving accompaniments. Or maybe just ask his "reindeer."
Professor Balkin's top ten list nearly caused damage to my keyboard. Fortunately, the coffee that spewed back through my nose laughing missed. Too much information, right?

14 January 2004

For those of us who struggle with the "federal/state divide"—you lucky bastards in Europe don't know how good you have it—there was an interesting decision this morning from the Supreme Court. In a 9-0 opinion spanking the Fifth Circuit soundly (see, it's not just the Ninth Circuit that gets criticized as "frankly nuts"!), Justice Kennedy for the Court held that when:
       
  • State officials, in a previous federal suit on a federal cause of action, signed a consent decree;
  •    
  • The officials were properly parties (instead of the state itself) under Ex parte Young; and
  •    
  • A plaintiff later files suit against the state itself (not the officials, who may well no longer be in office) to enforce the consent decree,
the state may not claim immunity from suit in federal court under the Eleventh Amendment. Frew v. Hawkins, No. 02-628 (US Jan. 14, 2004) (PDF, 220kb). Throwing a bone to the Fifth Circuit, the opinion also notes that a judge may modify a consent decree to account for changed conditions, but the burden to demonstrate changes and justify modifying the decree falls on the party seeking modification (in this instance, the state).

(Aside: I realize that the last sentence is legalistic and relies upon technical vocabulary. "Modify" could have been just "change"—except that this would make the conditional clause ambiguous without adding a qualifier to each use of the word "change." This is one of the few times that a legalism actually makes things clearer; "modify" isn't that difficult a word, even in the legal context.)

This is the correct decision. IMNSHO, Eleventh Amendment immunity has been extended too far, with College Savings Bank being the most-obvious example. It is also logically inconsistent with Article V, but does not explicitly modify (there's that word again) Article V—it has been treated through the years only as modifying jurisdiction under Article III. There's that "read the Constitution as a whole" argument again! Even without this, though, the key question is not actually one of immunity; it is, as Justice Kennedy's opinion makes clear, one of enforcing something already agreed to in a fashion that does not place form over substance. We all pretend under Ex parte Young that suing a government official in his/her "official capacity" is not the same thing as suing the government itself. This explains, for example, why last year's copyright-extension decision is Eldred v. Ashcroft (previously filed as Eldred v. Reno), not Eldred v. US. Justice Kennedy's decision recognizes that this distinction really makes no sense when it comes time to enforce a judgment obtained against those officials when they later (allegedly, anyway) violate that judgment. That is what a consent decree is: it is a settlement of a lawsuit and thus has the same force as a verdict from a jury trial.

The Number of a Class…
is the class of all classes similar to the given class. Good old Frege; he's almost as confusing as is managing a class action. Or justifying one. (As Hans Grüber might say, "The benefits of a classical education.")

In any event, I was right and the business community was wrong. Or, at least, when somebody even tried to consider class actions and their impacts from other than an anecdotal perspective with a predetermined outcome—that is, actually did an "experiment" to test a theory—it refuted, or at least seriously questioned, the common business assertion that class actions are ruining American business. See Jonathan D. Glater, "Study Disputes View of Costly Surge in Class-Action Suits," New York Times (14 Jan 2004).

At least, this is what passes for experimental data in economics. More than anything else, the obvious and serious problems with the data even available to the researchers—and particularly data available to researchers who are not hindered by hidden (or not-so-hidden) agendas of the people and organizations funding the research—make drawing any policy conclusions from the theorizing of the so-called "trial bar" or the business/insurance complex less reliable than is drawing policy conclusions from a single interview with someone grabbed off the street. One major problem is that all of the available data is anecdotal. This means that it is analyzed if, and only if, it even comes to the attention of the researchers. Notice that in the article in question, not once is there a reference to any finance-based class action, such as a securities suit or a TILA action. (I have only anecdotal evidence; but that includes consideration of confidential settlements, of which I kept a confidential and encrypted record for every matter in which I was ever involved, so at least it's more inclusive that way.) Everything is based upon discrete events (civil rights and traditional torts), not upon patterns and general practices. To say the least, this greatly skews any policy-based analysis of a general rule.

Further, the confidentiality problem is ultimately fatal to any analysis of any publicly available data, and anybody who relies upon statistical analysis of selective-reporting data that is not disclosed didn't live through the 1960s and 1970s. Two words: "body count."

The real problem is that we're crossing the Erie line with the whole argument. Class actions are a procedural device used by courts to manage their dockets (as difficult to manage as a class action is, it's a helluva lot less difficult to manage than the aggregate of, say, 125 individual actions). However, the real argument is over the compensation awarded after trial or as a result of settlement based upon the substance of the underlying action. This substantive flaw—if it is, in the aggregate, an objectively verifiable flaw, and not merely a reflection of self-interest in minimizing costs to an individual economic actor overwhelming proper systemic internalization of costs—is then used to justify changing the procedure in a manner that very well may be outcome determinative. In the abstract, that looks something like this:

       
  1. Procedural Rule X applies to and defines all lawsuits of class A.
  2.    
  3. Rule X results only in collective adjudication of the lawsuits in class A. Rule X does not alter the substantive Rules N1…Nn used to determine the actual results in the lawsuits, whether aggregated as L(A) or individually litigated as L(A1)…L(An).    
  4. Prelawsuit wealth and resources available for litigation or other determination of the substantive outcome are equal for both sides in all lawsuits of class A, and therefore can be removed from the process as a consideration.
  5.    
  6. The results of the lawsuits in subclass A', which is substantially less than all of class A, are unsatisfactory to the subclass of defending parties in subclass A', subsubclass A".
  7.    
  8. Therefore, Rule X is unsatisfactory for all of class A and must be replaced.
  9.    
  10. New Rule X' must result in a different substantive aggregate result for lawsuits in subclass A' that is more favorable to subsubclass A".

To say the least, this does not pass the laugh test.

13 January 2004

"Opportunity doesn't always knock… sometimes it rings." And sometimes it hangs up. So it did for the 10,000 people who invested a total of $300 million in the payphone sale-and-leaseback arrangements touted by respondent under that slogan. The Securities and Exchange Commission (SEC) argues that the arrangements were investment contracts, and thus were subject to regulation under the federal securities laws. In this case, we must decide whether a moneymaking scheme is excluded from the term "investment contract"simply because the scheme offered a contractual entitlement to a fixed, rather than a variable, return.

SEC v. Edwards, No. 02-1196 (Jan. 13, 2003) (slip op.) at 1 (record citation removed for clarity). The irony that this 9-0 decision authored by Justice O'Connor appeared two months after oral argument (with two major holidays in between) and the morning after a long segment on the Lehrer Report during which John Yoo argued that Justice O'Connor likes to be "in the middle" is a bit much.

Justice O'Connor's apparent ire is well-founded. She uses the term "scheme" instead of "program" for good reason: the defendant's sale-and-leasback arrangements were a pyramid scheme, depending for much of the "fixed return" on new money invested by new suckersparticipants. Yet another reason that F. Lee Bailey should not have started defending white-collar crime…

I am eagerly awaiting the Perfesser's take on this; it should be good for some laughs at the expense of somebody or other.

SECRET NOFORN PUBIND

The publishing industry's culture of secrecy is claiming more victims. According to a story in today's New York Times, a bankruptcy trustee has written letters to freelance authors of the late Lingua Franca (declared bankruptcy in 2001) trying to recover payments for articles as preferences. See "A Freelancer Tale: Paycheck Clears; Suit Demands It Back" (and don't blame the author for the inaccurate headline; no adversary complaint has yet been filed, according to the docket). Should any of the authors actually have the resources and guts to fight the trustee on this one—usually for payments of $1,500 or less—there will be some lessons for all in preferences in bankruptcy.

Under the Bankruptcy Code, a debtor is not allowed to prefer one otherwise-equally placed creditor over another during the period shortly before declaring bankruptcy.

Except as provided in subsection (c) of this section, the trustee may avoid any transfer of an interest of the debtor in property—
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made—
   (A) on or within 90 days before the date of the filing of the petition; or
   (B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would receive if—
   (A) the case were a case under chapter 7 of this title;
   (B) the transfer had not been made; and
   (C) such creditor received payment of such debt to the extent provided by the provisions of this title.

11 U.S.C. § 547(b). The key here is whether the articles created an antecedent debt—and I think that the trustee will be in for a surprise.

Although I have not seen any of the actual letters from the trustee, it appears that the trustee is acting as if all rights to the stories had somehow been transferred. I doubt that is the case; instead, a license to use intellectual property was transferred. "Licenses" are "property," but not quite in the same way. Further, the trustee will also have to prove that the the authors, solely through the timing of the payment, received more than a creditor would have after a hypothetical complete liquidation and application of the priority chain. Given the intersection with the Copyright Act, among other things, this is not something that I'd take on a contingency basis.

The policy question is whether payments made to acquire stock for resale in the ordinary course of business—or, as in this case, the license to allow others to see that stock—qualify as preferences when the "stock" in question is an individual, unique item. I suspect that is what is confusing the trustee. It doesn't look similar to, say, payments for office rent, so it gets more scrutiny. That publishing contracts and practices are so opaque is not helping matters at all.

12 January 2004

Glut? What Glut… of Good Books?
In yesterday's Observer (UK), Robert McCrum observed that:

This is nonsense. Writers of Louis de Bernières's stature are not going to be affected by the vagaries of publishing. They write because that's what they do. Their work is happily immune to the publishing climate. No publisher with the typescript of Captain Corelli's Mandolin on his or her desk is going to say: 'Awfully sorry, Louis, old boy. Simply can't publish this till the year after next. Cutbacks in the adult list.' Any publisher who did that would be taken into Bedford Square, hanged from a tree and pelted with remaindered copies of Jeffrey Archer's Prison Diaries.

*  *  *

Book publishing is a hit and miss business, but it has always reliably been a mirror to society. If it is now producing more books than ever, this is because there is an appetite and, globally, a market. No amount of list-cutting is going to make this go away. But there is a solution. The problem British publishers could start by adopting far higher levels of discrimination in the books they commission.

"Unhealthy Bounty" (11 Jan 2004) (emphasis added).

Perhaps over here, we'll just offer them some cement overshoes and send them to swim with the fishes in the East River, after pelting them with copies of [insert your favorite recent publishing disaster involving a multimillion-dollar advance here]. The problem is that they'd just track mud from the river bottom into the lobby at their new employer—another publisher in New York.

11 January 2004

I'm an equal-opportunity antitotalitarian: I despise the idea of ruling "classes" and ruling "dynasties," regardless of their politics. Consider, for example, the aftermath of the October 1917 putsch in Russia. The so-called October Revolution really "lasted," at least in terms of establishing clear and unambiguous political control, until 1920 or so. Those in the West who even know about the Russian Civil War at all tend to think of it in terms of "White Russians" against "Red Russians," without considering that both the "Anti-Tsarist" and "Tsarist" factions (hey, why should I be consistent in my spelling and transliteration when the Cyrillic spelling changed over time?) spent more time, energy, and lives on intrafactional infighting than on fighting each other. The "White Russians" were more self-destructive and represented the enemy that many former soldiers already knew; this had as much to do with the eventual "Communist" victory as did any other single factor.

So I dislike the Kennedy family's approach to politics, even via their semiadopted son-in-law the Governator. Although JFK was trying to make a joke with the infamous "telegram" from his father imploring him not to "buy one more vote than necessary," I am not entirely certain how much of a joke it really was. (Remember, I live near Chicago—where a death certificate is merely alternate proof of voter registration.) However more closely their politics agree with mine than their opponents, that's not good enough.

And when I disagree with the politics and policies, I tend to get even more cynical. Although the Perfesser will probably turn up his nose at this, Kevin Phillips's article in today's Los Angeles Times, on the occasion of his new book on the Bush dynasty (there are substantive reasons I keep referring to him as "George III" that go far beyond the convenience of that label for sniping), bears some consideration.

Dynasties in American politics are dangerous. We saw it with the Kennedys, we may well see it with the Clintons and we're certainly seeing it with the Bushes. Between now and the November election, it's crucial that Americans come to understand how four generations of the current president's family have embroiled the United States in the Middle East through CIA connections, arms shipments, rogue banks, inherited war policies and personal financial links.

Kevin Phillips, "The Barreling Bushes" (11 Jan 2004). Phillips is known as much for meticulous research and documentation as for his prose and politics.

Totalitarianism is bad for the arts: there is no room for the arts where there is no room for dissent. Given the sheer size of the population, the increasing popularity of translation, and the absence of need for translation of music (one of the major art-forms of Russian culture), the inability of the Soviet Union to produce home-grown artists in its 75 years is rather startling. Prokofiev, Shostakovich, Zamiatin, and Pasternak were all adults by 1917, and their greatest works are at minimum subversive to the "Communist" regime. Yevtushenko, while younger, is also more famous for his subversive works than anything else; ditto Gorbanevakaya, Mayakovsky—and that's about it for the memorable arts out of two-and-a-half generations of Russia. Most of the other "memorable discourse" has been in essays, histories, and works that would not be remembered except for the political struggles of their authors. The most obvious example is Solzhenitsyn, whose only truly "fictional" contribution One Day in the Life of Ivan Denisovich pales in comparison to nonfiction like The Gulag Archipelago. All of those Russian poets who travelled the coffee-house circuit were expatriated, usually forcibly, from the Soviet Union; and most of their work is crap anyway.

This is by no means limited to Russia; that is just the most convenient (and accessible) example. Of course, this is not to ignore the totaltarianism suffered prior to the Revolution; it is only to note that totalitarianism under the Tsars was not as intrusive as it was under the "Communists." (As bad as the Okhrana was, it generally left acknowledged composers, painters, and sculptors alone, if only to avoid upsetting their patrons.) The twelve years of Hitler's regime is probably not long enough for a fair comparison; and I am simply not familiar enough with the history of the arts in, say, pre-Pinochet times to compare them to those during and after his rule.

So far, the US has avoided petrification; so far. The marketplace can also be a tyrant, because it actively discourages diversity and actively encourages imitation and risk-avoidance. The danger, though, is that we can become too comfortable in our "superior" market-based censorship mechanisms, and end up like Robert Kilroy-Silk—whatever that may turn out to be.

10 January 2004

Literary Cancer Patients
There must be some cancer patients taking advantage of a secret medical-marijuana law running the New York Times book section and Book Review this week. That's the only explanation I can come up with for these two items.

First, the absurdly pompous Frank Rich mentions a book's name and then tries to show how much more clever than everyone else who writes about cinema he is. Like that's a surprise to anyone who has to put up with his reviews; it's sort of like having to pay attention to a blowhard member of the School Board because that member has been around forever and nobody can organize a campaign against him or her.

Cold Mountain will no doubt be promoted, in ace Miramax fashion, into the Oscars sweepstakes. But this is a new era when even the Oscar show, no longer the automatic mass draw it once was, has had to switch its date and retool itself to fend off the Golden Globes. As John Dunne would be the first to point out, however, an Oscar was never an unalloyed blessing. After it hit the jackpot with Chicago last year, Miramax went out and acquired the rights to three more musicals (Guys and Dolls, Pippin and Damn Yankees), in uncanny, if presumably unconscious, emulation of the misguided Zanucks all those Hollywoods ago.

Frank Rich, "Bullies Are Not What Ails Hollywood" (Jan. 11, 2004) (typography corrected for clarity).

The headline writer either has no understanding of irony or understands it all too well (and doesn't like Mr. Rich). What is most interesting about this quotation is that it is the last paragraph of the "review"—and it doesn't mention the book, its subject, or even the author of the book that is purportedly being reviewed. This is typical of Mr. Rich's film reviews, so I shouldn't be too surprised. This is just plain bad writing that wasn't edited, possibly so that Mr. Rich wouldn't be offended by some wet-behind-the-ears editor pointing out that he hadn't written about the stated topic. (This should sound exactly like what has happened with Certain Overrated Bestselling Authors as they have gotten farther along in their publishing careers.) Mr. Rich's review makes no sense in any event, because it both states nothing that is not already common coin to potential readers of the book—anybody who really wants to know what's wrong with Hollywood has probably already formed an opinion and knows the particular anecdotes (or parallel ones)—and fails to evaluate the book under consideration. Perhaps that points out who is the real bully here.

Then, on the other hand, we have something that might have been pulled from a bad parody of the bad parody mentioned early in Dead Poets' Society (the "J. Evans Pritchard, PhD" preface to the poetry textbook).

Mr. Moretti cheerfully acknowledged that his ideas were controversial. But that has not dampened his enthusiasm. "After Christmas, I'm going to teach a class on electronic data in which we will work on 8,000 titles from the mid-18th century to the 19th century," he said, eagerly elaborating his vision of what he called "literature without texts." "My little dream," he added wistfully, "is of a literary class that would look more like a lab than a Platonic academy."

Emily Eakin, "Studying Literature by the Numbers" (Jan. 10, 2004) (fake paragraphing removed for clarity). Professor Moretti, who teaches at Stanford, has a case of academic penis envy for the more-numerically oriented branches of learning. The absurdity of his work should be readily apparent to anyone with real scientific training who understands the difference between epidemiology (which is all that he's doing) and empiricism. Epidemiology—post hoc statistical study of surface characteristics—allows one only to correlate events, such as purported correlations between the phase of the moon and stock market activity. The key is that epidemiology does not of itself require any attention to what is being studied, or to actual causation. It ignores both reflexive (one event within the field influencing the results of later events) and external (a common cause not within the field) causality. It can be useful in pointing toward areas for further study; but that is all.

In this instance, Professor Moretti's work (I've read a little bit, but not the particular article mentioned in Ms. Eakin's piece) fails to account for the prominence and internal influence of "seminal" works within literature and for completely nonliterary causation of his data. Consider, for example, the problem of "women authors" he mentions. At least within English literature, several outside factors (such as the prevalence and nature of education offered to women, which has historically been at least different from that offered to men) are massive influences. Then there's the whole issue of the often-flawed works that open doors for later writers; one obvious example is Virginia Woolf's "To the Lighthouse." But one can discern these kinds of things only by actually reading the works—not to mention that accurate characterization of the works requires reading them in the first place. What is really frightening is that this puts me in agreement with Harold Bloom, whose closed mind and closed canon stand for much of what is wrong with literary scholarship in the first place. Or, in a legal context, it is as if we are to discern something significant about the law itself from counting West keynotes and graphing them—forgetting all along that keynotes are inherently reflexive.

So, where can I get some of what they're smokin' at the editorial desk? It sure sounds more entertaining than single-digit weather on the Silicon Prairie…